Alberton-based traffic fines administrator Fines4U has recently announced that it will take payment in bitcoin from clients who want to settle their outstanding traffic fines.
According to owner Cornelia van Niekerk, the response has been overwhelming – but for information about bitcoin as an asset class, rather than a payment method.
This is in line with the trend identified by cryptocurrency platform Luno and even the Reserve Bank in its one and only position paper on virtual currencies.
Van Niekerk manages traffic fines on behalf of about 500 companies and 8 000 individuals countrywide.
She told Moneyweb that she has been involved in bitcoin since June and has decided to offer clients who are similarly invested the opportunity to spend their bitcoin with Fines4U.
She recently started advertising that the business accepts bitcoin as a payment method, but is still to do the first deal in this cryptocurrency.
The idea is that she will determine the outstanding amount for the client’s traffic fines, give them the amount in bitcoin, valid for a limited period.
She will receive the payment via her own Luno wallet and deposit the rand on behalf of the client into the account of Fines4U.
She cites the immediacy of the transaction and the low cost compared to banking charges as advantages.
Van Niekerk says she realises that she will run the risk of the bitcoin price falling, but she is prepared to do so in the belief that the cryptocurrency will appreciate over the long run.
Recent price movement of bitcoin in rand
The response to her advertisement regarding bitcoin has been overwhelming, Van Niekerk says. Clients are however more interested in bitcoin as such, than in using it as a payment method.
“I deal with many clients on a daily basis, many of whom are big businesses. Suddenly everybody wants to get more information from me about bitcoin.”
A healthcare professional from Sandton who cannot be named for professional reasons, says he has been accepting bitcoin as a payment method since February.
He says he likes the idea of a decentralised currency and saves on transaction costs and administration.
He does not actively promote it as payment method and has over the period had four to five clients paying him in bitcoin. He also retains the bitcoin and deposits rands in the practice.
Bitcoin SA spokesperson Werner van Rooyen told Moneyweb Luno has partnered with both PayFast and BidorBuy. “This means that thousands of online merchants have bitcoin as a payment method available on their websites.”
It is not clear how many merchants have embraced it outside the online environment.
Internationally the Wall Street Journal a few days ago reported that PwC Japan has announced that it will accept payment in bitcoin as did E&Y Switzerland earlier.
Van Rooyen says bitcoin payments can be faster and cheaper, in some instances. “The business also doesn’t have to worry about securing their customers’ sensitive financial information, like they would need to for credit card transactions.”
He says transactions are easy and intuitive via the Luno platform.
“There are two parts to security, however: security on the platform’s side and security on the customer’s side.
“We spend an enormous amount of time, money and resources to keep our platform secure (and we have never lost a single cent). That said, if you gave someone your Luno username and password, they could get access to your account.”
Van Rooyen says Luno provides an Application Programme Interface (API) for integration with the merchant’s business processes. “Businesses integrated with our API (like all PayFast merchants) can send out invoices in rand. We then allow the customer to pay in bitcoin, which we convert back to rand to end up in the merchant’s bank account.”
Bitcoin is however used less as a payment method today than it was a few months ago, Van Rooyen says.
“Most people see it more as an asset class (and if you really believe it’s an asset, you think it might be worth more in future, you don’t want to dispose of it). “
He says the other reason for the relative decline in payments using bitcoin is that “the bitcoin network has more transactions and users than it can currently properly handle, so the cost of sending bitcoin (and making a payment), has become slower and expensive, to the point where it isn’t a viable method to pay for your cup of coffee.”
It still works well with larger international payments, he says.
Van Rooyen says it will be a while before people use bitcoin for payments. “The biggest interest (by far) right now is using bitcoin as an alternative asset, a hedge against depreciation.”
CNBC reported last month that financial research firm Autonomous NEXT shows rapid growth in the number of funds investing in digital assets like bitcoin. According to Autonomous Next a total of 124 funds were invested in this asset class. It estimated the ‘crypto-funds’ have about $2.3 billion in total assets under management.